Hedge-Fund-Owned McClatchy Axed Miami Herald Employees on Good Friday

McClatchy, one of the largest newspaper companies in the U.S., revealed layoffs this month at the Miami Herald and El Nuevo Herald, in the worst round of job cuts to the papers' news staff since 2019, according to the One Herald Guild.

On Good Friday, April 7, McClatchy revealed it was laying off six employees, including a local research director, two copy editors, a technology and finance reporter, a page layout designer, and a production staffer who works on interactive features for special projects.

"Today, we notified six of our colleagues that their positions have been eliminated effective April 23, 2023," Monica Richardson, McClatchy's vice president of news for large markets, wrote in an internal email that Friday evening. "We recognize how difficult this is for these colleagues, and we are working diligently to provide them with the information they need during this transition."

The layoffs reflect a trend of cost-cutting plaguing local newsrooms with hedge funds and private equity companies at the helm of major newspaper chains. New Jersey-based hedge fund manager Chatham Asset Management purchased McClatchy and its 30 newspapers in late 2020 after the company, whose outlets had been in the McClatchy family for 170 years, declared bankruptcy.

"We had a motto early on that our journalism is strong when our journalists are strong, and we saw that hedge-fund-owned chains of newspapers typically lead to cutting cost in favor of maximizing profits," says Joey Flechas, the Miami Herald's Miami government and public affairs reporter and co-chair of the One Herald Guild union. "We had high hopes that would not manifest here the way it's manifested in other chains. Our fear is that it is changing, and now perhaps, this is the beginning of that business model."

Flechas tells New Times that McClatchy informed staff in late February that potential layoffs were coming. He argues that the publisher could have carried out the job cuts sooner rather than informing the six employees on Good Friday.

"I understand that the company has rights underneath the contract, and they are free to avail themselves of those rights, but I don't see why that's a conversation we couldn't have on a different date earlier," Flechas says. "It definitely has left a bad taste in the mouths of a lot of staffers across this newsroom."

Richardson said the layoffs had nothing to do with the quality of work. Rather, it was a matter of "finding efficiencies," a vague explanation that left many staffers scratching their heads, according to the union.

"The positions were selected based solely on our strategy to prioritize local content creation in the newsroom by finding efficiencies in other areas," Richardson said in the email to staff. "These changes better align our resources with other local newsrooms inside and outside McClatchy."

In response to Richardson's email, Flechas warned the publisher that the layoffs will have an immediate impact on the newsroom.

Dissolving the copy editor positions could expose the company to liability and potentially undermine the paper's credibility if mistakes crop up, Flechas said. He argued that the cuts will leave a vacuum in coverage of emerging business trends and Miami's tech community. And he added that the research director was crucial in the Herald's coverage of the Champlain Towers South collapse, for which the paper won a 2022 Pulitzer Prize for breaking news.

Flechas tells New Times executives declined to attend a staff meeting last week to answer their questions about the layoffs, leaving many staffers feeling uneasy and frustrated.

"The company is claiming... it has to do with, the word they're using is 'realignment,' and that positions were selected based on a strategy to prioritize local content creation in the newsroom," Flechas says. "We don't understand how that makes any sense. The company is basically saying that cutting journalists will make our local journalism stronger. We don't buy it."

Flechas adds that the job cuts seem out of step with prior messaging from management, who had touted staffers' success in growing local audiences and hitting financial marks. He says the publisher has declined to provide a glimpse of its financials in the aftermath of the layoffs' announcement and that the lack of transparency leaves staff worrying there will be more layoffs.

The layoffs come to light after Chatham and its founder Anthony Melchiorre recently agreed to pay $19 million in disgorgement and penalties for alleged violations of federal-investment adviser law. In an administrative case, the Securities and Exchanges Commission accused Chatham and Melchiorre of improperly trading bonds in Chatham's tabloid publishing company American Media Inc. The case did not involve McClatchy outlets and predated Chatham's acquisition of the McClatchy company out of bankruptcy.

"One may not have to do with the other, but we're reporters, and we're sitting here wondering how can our owners look at us and say, 'We need to cut costs' after that," Flechas says. "That's very upsetting."

Under its contract, the union says it's entitled to submit an alternative for management to review to avoid laying off the employees. Union leadership proposed eliminating five recently vacated positions and laying off one current employee who has volunteered to accept severance. The company told the union it will get back to them today, April 18.

"We feel this is a viable alternative that preserves the important work of existing employees," Flechas says. "We hope the company will give it serious consideration."

In 2019, prior to the bankruptcy and Chatham acquisition, McClatchy underwent a large-scale workforce reduction when more than 200 employees nationwide, including several Miami Herald reporters, accepted buyout offers.

After Chatham took over McClatchy, the publisher's Miami newsrooms managed to escape workforce gutting the likes of which occurred after hedge fund Alden Capital acquired Tribune Publishing and drastically reduced staff at the Chicago Tribune and the Virginian Pilot, among other papers, largely effected through employee buyout offers in 2021.

Over the last year, there has been a wave of key staff departures from the Miami Herald, including prize-winning investigative journalist Nicholas Nehamas, who announced he was heading to the New York Times.

Despite the recent exodus, the turnover may not be any higher than previous peaks, according to Flechas. He says the union is committed to ensuring the Miami Herald is a destination paper where people can build a career.

"It's not easy being in this job," Flechas tells New Times. "It's not easy doing local journalism in this environment here, but if anyone out there reads this and cares about local journalism, then I hope that McClatchy hears from those people about the pain we're feeling as a community to try and keep our journalism strong."

McClatchy did not respond to New Times' request for comment.